Philippines tax revenue goal ‘ambitious,’ says BMI
The Philippine government’s tax revenue target appears “ambitious,” with value-added tax collections estimated to rise by 12.8 percent to P860 billion next year even without introducing major tax reforms, according to research and analysis firm BMI.
Manila, Philippines — The government's tax revenue goal appears ambitious, with the value-added tax (VAT) projected to increase by 12.8% to P860 billion next year, even without major tax reforms, according to research firm BMI. While easing inflation and higher Metro Manila minimum wages, affecting over 1.1 million workers, should boost consumption and VAT collections in 2027, BMI doubts this will be enough to meet the target.
The Marcos administration projects tax revenues to rise to P4.85 trillion, or 14.6% of GDP, in 2027. BMI expects revenue to slightly decrease from 15.8% of GDP in 2026 to 15.7% in 2027, largely due to a projected decline in non-tax revenues following a record government dividend windfall in 2026. Overall government revenues are expected to reach P4.81 trillion, or 15.8% of GDP, in 2026 and P5.21 trillion, or 15.7% of GDP, in 2027.
The government has proposed new tax measures, including higher excise taxes on sweetened beverages, tobacco products, alcohol, automobiles, and a new excise tax on plastics, which could potentially generate a net revenue gain of P47.9 billion annually from 2027 to 2030. Despite these measures, BMI warns that the pace of fiscal consolidation remains modest, with the fiscal deficit expected to narrow to 5.1% of GDP in 2027 from 5.4% in 2026.
BMI forecasts the fiscal deficit to remain tilted toward a wider deficit, as revenue targets may be challenging to achieve, even with new tax reforms. The GDP growth of 4.9% in 2027 is below the government's 5-6% budget assumption, adding to the risks. Additionally, BMI anticipates total expenditure to decrease to 20.8% of GDP in 2027 from 21.3% in 2026, and flags the US-Iran conflict as another risk, potentially dampening revenue collections and increasing the pressure for broader cost-of-living support measures.
Written by urgent.news from Philippine Star Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
